Mankind’s favorite plant has a dazzling variety of slang terms - however, the one which is probably the most common of all is the one that seems to make the least sense. Why is it called “pot?”
SWAG it grows in pots?
Wouldn’t mankind’s favorite plant probably be rice or something? It, or one of its sister grains, probably wins for acres cultivated and utility.
Why is what called “pot?”
Grass, Weed, Dope, Mary Jane, Acapulco Gold, Reefer, Bud, The Green Guy, Ganja, Stuff, Boo-ya, Chronic, Herb, THC, or Indo.
The use of “pot” to mean “marijuana” originated in the twenties, and evolved from the Mexican usage of “potiguaya” for marijuana leaves. That slang word was probably based on the Spanish phrase “potacion de guaya”, which translates literally as “the wine of grief.”
William Safire did a column on the etymology of “pot” in the NY Times on December 22, 2002. I have a hard copy but I’m not sure if it appears online. He puts the first appearance in print in a 1938 short story.
See also the entry at Etymology Online.
Bomb, KGB, Wacky terbacky, J, Jolly green, Red bud, green bud, purple
Safire is just quoting the OED’s first cite in print. I’d like to see any evidence that it originated in the twenties, although I wouldn’t doubt that it did.
AKA hemp.
In the '30s it grew wild in nearly every vacant lot in and around Chicago. 
It could have been Acupulca Gold going to waste but no one thought of smoking it.